Loading...
HomeMy WebLinkAbout09-02-2009 Community Foundation Designated Fund AgreementSAN LUIS OBISPO C®TJNTY COMMUNITY FOUNDATION Designated Fund Agreement <— THIS AGREEMENT, made and entered into on 2009 by and between the SAN LUIS OBISPO COUNTY COMMUNITY FOUNDATION, INC. (the "Foundation ") and the CITY OF SAN LUIS OBISPO (the "City "). WITNESSETH: WHEREAS, the City desires to have established in the Foundation a designated fund for the purpose of providing a mechanism for citizens to contribute to the preservation and maintenance of open space lands owned by the City of San Luis Obispo, and for those citizens to receive the full benefits of the laws governing charitable contributions ; and WHEREAS, the Foundation is a nonprofit public benefit corporation exempt from taxation under Internal Revenue Code ( "Code ") section 501(c)(3), a public charity described in section 170(b)(1)(A)(vi) of the Code, and accordingly an appropriate institution within which to establish such a charitable endowment; and WHEREAS, the Foundation is willing and able to create such a Designated Fund, subject to the terms and conditions hereof, NOW THEREFORE, the parties agree as follows: 1. NAME OF THE FUND. City and Foundation hereby establish in the Foundation a designated fund, termed the City of San Luis Obispo Open Space Preservation Fund. Subject to the right of the Foundation to reject any particular gift, the Foundation may receive additional irrevocable gifts of property acceptable to the Foundation from time to time from any other source to be added to the Fund, all subject to the provisions hereof all grants, bequests, and devises to this Fund shall be irrevocable once accepted by the Foundation. . 2. PURPOSE. The primary purpose is to assist the City in the acquisition of land and easements to preserve open space, wildlife habitat, and agricultural land in and near the City, and to assist the City in undertaking habitat conservation, environmental restoration, and passive recreational uses of those lands in manner consistent with the terms and conditions contained in paragraph 3. 3. DISTRIBUTION. Consistent with the Foundations' Spending Policy a portion of the annual allocable earnings of the fund and any principal, net of the fees and expenses set forth in paragraph 10, will be distributed to the organization described in Section 2 of this agreement; with special consideration detailed in Attachment A. A copy of the current Spending Policy is Attachment B. If any gifts to the Foundation for the purposes of the Fund are received and Page 1 of 6 1 accepted subject to a Donor's conditions or restrictions as to the use of the gift or income therefrom, said conditions or restrictions will be honored, subject, however, to the authority of the Foundation's Board to vary the terms of any gift if continued adherence to any condition or restriction is in the judgment of the Foundation's Board unnecessary, incapable of fulfillment, or inconsistent with the charitable or other exempt purposes of the Foundation or needs of the community served by the Foundation. No distribution shall be made from the Fund to any individual or entity if such distribution will in the judgment of the Foundation endanger the Foundation's Code section 501(c)(3) status. 4. ADMINISTRATIVE PROVISIONS. Notwithstanding anything herein to the contrary, the Foundation shall hold the Fund and all contributions to the Fund, subject to the provisions of the applicable federal and state laws and the Foundation's Articles of Incorporation and Bylaws. The Board shall direct or monitor the distribution of the Fund to ensure it is used exclusively for charitable or other exempt purposes within the meaning of Code section 170(c)(1) or (2)(B), and shall have all powers of modification and removal specified in United States Treasury Regulations Section 1.170 A -9 (e) (11) (v) (B ). The Board agrees to make available a copy of the annual examination of the finances of the Foundation as reported upon by independent certified public accountants. 5. CONDITIONS FOR ACCEPTANCE OF FUNDS. City agrees and acknowledges that the establishment of the Fund herein created is made in recognition of, and subject to, the terms and conditions of the Articles of Incorporation and Bylaws of the Foundation as from time to time amended, and that the Fund shall at all times be subject to such terms and conditions, including, but not by way of limitation, provisions for: (a) Presumption of donors' intent; (b) Variance from donors' direction; (c) Amendments. 6. CONTINUITY OF THE FUND. The fund shall continue so long as assets are available in the Fund and the purposes in the Fund can be served by its continuation. If the Fund is terminated, the Foundation shall devote any remaining assets in the Fund exclusively for charitable or other exempt purposes that: (a) are within the scope of the charitable or other exempt purposes of the Foundation's Articles of Incorporation; and, (b) most nearly approximate, in the good faith opinion of the Board, the original purpose of the Fund. 7. NOT A SEPARATE TRUST. The Fund shall be a component part of the Foundation. All money and property in the Fund shall be held as general assets of the Foundation and not segregated as trust property of a separate trust; provided that for purposes of determining the share of the Foundation's earnings allocable to the Fund and the value of the principal of the Fund, the interest of the Fund in the general assets of the Foundation shall be a percentage Page 2 of 6 determined by dividing the gift to the Fund by the then value of the total assets of the Foundation, such percentage interest being subject to adjustment at the time of each addition to or reduction of the assets of the Foundation. 8. ACCOUNTING. The receipts and disbursements of this Fund shall be accounted for separately and apart from those of other gifts to the Foundation. 9. INVESTMENT OF FUNDS. The Foundation shall have all powers necessary, or in its sole discretion desirable, to carry out the purposes of the Fund, including, but not limited to, the power to retain, invest, and reinvest the Fund and the power to commingle the assets of the Fund with those of other funds for investment purposes. 10. COSTS OF THE FUND. It is understood and agreed that the Fund shall share a fair portion of the total investment and administrative costs of the Foundation. Those costs annually charged against the Fund shall be determined in accordance with the then current fee schedule identified by the Foundation as applicable to funds of this type; a copy of the current fee schedule is Attachment C. Any costs to the Foundation in accepting, transferring, or managing property donated to the Foundation for the Fund shall also be paid from the Fund, or by such equivalent arrangements as may be acceptable to both Foundation and City. IN WITNESS WHEREOF, City has executed this Agreement and the Foundation has caused this Agreement to be approved by its Board and to be executed by a duly authorized officer, all as of the day and year first above written. CITY . ice✓ � �yl� _ /_� David F. Romero, SAN LUIS OBISPO COUNTY COMMUNITY FOUNDATION. INC. Wendy Br President Barry Vander len, Executive Director Page 3 of 6 APPROVED AS TO FORM: ATHAN P. LOWELL City Attorney Attachment A J Mechanics of Distributing Proceeds from the City of San Luis Obispo Open Space Preservation Fund The City of San Luis Obispo Open Space Preservation Fund is established to assist the City in the acquisition of land and easements to preserve open space, wildlife habitat, and agricultural land in and near the City, and to assist the City in undertaking habitat conservation, environmental restoration, and passive recreational uses of those lands. The Foundation relies upon the public process to approve projects used by the City of San Luis Obispo. The Foundation will encumber available money in the Fund and transfer money to the City upon final and/or interim reports on progress in implementing the projects. Nothing in this attachment supercedes sections of the agreement, and this attachment sets forth only the mechanics of transfering available money from the Fund to the City. Page 4 of 6 Attachment B Spending Policy on Endowment Funds for 2009 San Luis Obispo County Community Foundation 1) Allocates a percentage of the fair market value of each fund that will be spent on grant distributions. 2) Provides: - Reliable source of grant dollars - Enough reserve for long -term growth of assets after inflation - Evens out the flow of grant dollars to the community 3) Our Spending Rates and Implementation SPENDING POLICY FOR GRANTS: 4.5% of the average annual fair market value of a fund, calculated over the last three years, will be made available each year for grant distributions from that fund provided that the fund has a positive income balance. IMPLEMENTATION: For September 30 of each year, the 3 -year average fair market value of each endowed fund will be calculated. 4.5% of that amount will be transferred from each fund's income balance to its "available to spend" balance for use in the following year along with any balance remaining from prior years. From the available to spend balance, grants can be made throughout the year in accordance with the fund agreement for each fund. If the income balance for a fund is negative at year -end (due to past market conditions), the spending policy will not be implemented for that fund in the following year. In addition, the spending policy will not be implemented for those donor advised endowment funds whose fund agreements specify that the fund is not subject to the spending policy. ADMINISTRATIVE FEE POLICY FOR OPERATIONS: .75%-2% per annum of each fund's fund balance is assessed quarterly and transferred to the Foundation's Operating Fund. (See "Fees for Funds at the Community Foundation," which is revised annually by the Board) - INVESTMENT MANAGEMENT FEES: .5 %-1% per annum of the endowment is charged by the Community Foundation's professional investment managers for their services. This amount is shared proportionately by all the funds in the endowment pool. 4) Real Growth - Given our expectations of total net return on investments (9% or better), these spending rates will provide for real growth on endowment dollars if inflation is under 3 %. 5) Ideal Rates - The Council on Foundations recommends that spending rate should be between 4 -6 %. A well - applied spending policy will return more dollars to the community in the long run as the pool of money generating revenue grows. Board Approved September 3, 2008 Page 5 of 6 Attachment C San Luis Obispo County Community Foundation Effective July 1, 2007, the following fees apply to Designated Endowment Funds: Fee Fund Balance 1.5% per annum, $625 minimum $25,000- 499,999 1.0% per annum $500,000 - 1,999,999 .75% per annum $2,000,000 and more In addition to the administrative fees listed above, the San Luis Obispo County Community Foundation currently pays 75 basis points (.75 %) to UBS for consulting services on the investment of its endowed funds. These annual fees are paid quarterly and charge to the individual endowed funds. Page 6 of 6